Mobile Money Global Event - GSMA Money Global Event Wednesday October 7, 2015 ... Ecosystem foundations 4 Advocate for ... • Digital payment becomes mandatory

#MMGE15

#mobile360Africa

Mobile Money Global Event

Wednesday October 7, 2015

Cape Town, South Africa

#MMGE15

#mobile360Africa

Welcome

Seema Desai, Head of Mobile Money, GSMA

#MMGE15

#mobile360Africa

Mobile money continues to expand globally

ONE MOBILE

MONEY SERVICE

THREE OR MORE MOBILE

MONEY SERVICES

TWO MOBILE

MONEY SERVICES

INTEROPERABLE

MARKETS

NUMBER OF LIVE MOBILE MONEY SERVICES FOR THE UNBANKED

BY COUNTRY (DECEMBER 2014)

250+ live services in

nearly 90 countries

55 markets with at least

2 mobile money services

100+ planned new

launches

#MMGE15

#mobile360Africa

Sub-Saharan Africa is leading the world in Mobile

Money deployments – yet there is still huge unmet

opportunity

Source: GSMA intelligence, GSMA 2014 State of the Industry: Mobile Financial Services for the Unbanked

Sub-Saharan

Africa

East Asia

and Pacific

2%

Latin America

and Carribean

6%

South Asia

7%

22%

MENA

1%

MM Registered Users as % of Active Connections (2014) Mobile Money Contribution to Revenue (2014)

Huge potential unmet opportunity:

Almost 80% of mobile phone users in

Sub-Saharan Africa do not have a mobile money

account

2%

Millicom

Group

1.8%

Vodacom

Tanzania

21.3%

19.6%

MTN

Group

Safaricom

Kenya

MTN

Uganda

3%

14.7%

Orange

Group

Sample Operators

#MMGE15

#mobile360Africa

The opportunity can be realised through building a

successful mobile financial ecosystem

1. More services for customers which better

address their financial needs

2. Reduced costs for businesses, governments,

NGOs of distributing cash

3. Increased profitability for providers

Embracing the mobile financial ecosystem

brings major benefits:

#MMGE15

#mobile360Africa

To achieve this vision, there are barriers which

must be overcome

Crack the

business model

for new

ecosystem

services

Overcome

regulatory

barriers

Drive

industry

collaboration

Strengthen

foundations that

support the

ecosystem

#MMGE15

#mobile360Africa

To enable a greater range of digital transactions, which make mobile wallets more

central to the financial lives of users, particularly among the unbanked whose

financial needs are currently unmet.

Accelerate A2A

interoperability

Accelerate mobile

financial

ecosystem

Share data &

insights

Focus

areas

Programme

outcome

1 2 3 5Strengthn

Ecosystem

foundations

4Advocate for

enabling

regulation

Mobile Money Phase 3 - 2015-2018

#MMGE15

#mobile360Africa

Ramping up Interoperability: New

Developments in Rwanda and Madagascar

Stanislas Chevillard – Director, Orange Money, Orange Madagascar

Faith Chisulo – Head of Mobile Financial Services, Tigo Cash, Tigo

Rwanda

Chidi Okpala – Director & Head, Airtel Money, Airtel Africa

Moderator: David Lubinski, The Bill & Melinda Gates Foundation

#MMGE15

#mobile360Africa

4 markets are interoperable: Indonesia, Pakistan, Sri

Lanka, Tanzania

At least 2 will launch before end of 2015:

Madagascar and Rwanda

5 more are working towards interoperability

Mobile money domestic interoperability

#MMGE15

#mobile360Africa

Rwanda and Madagascar

Rwanda

Metrics Data

Socio

Economics

Population ~11,7m

GDP/capita 638 USD

Financial

Inclusion

Adults with

formal account42.1%

Mobile UsageMobile

connections~8,2 m

Mobile Money

Operators

Tigo (Millicom) Tigo Cash

Airtel (Bharti) Airtel Money

MTN MTN Money

Madagascar

Metrics Data

Socio

Economics

Population ~23 m

GDP/capita 463 USD

Financial

Inclusion

Adults with

formal

account

8.6%

Mobile UsageMobile

connections~8,2

Mobile Money

Operators

Orange Orange Money

Telma M’Vola

Airtel (Bharti) Airtel Money

Source: Findex data, World Bank

http://www.slideshare.net/womensworldbanking/what-does-financial-inclusion-in-mena-look-like-leora-klapper

#MMGE15

#mobile360Africa

Leadership

All committed providers have a shared vision, commit

resources to develop an on time and high performing

solution and invest in its deployment also after launch.

Planning

The process of delivering the new service is executed

efficiently, setting up a cross-organisation

interoperability task force, composed of leaders of the

initiative.

Collaboration

Core business areas work together effectively

Neutral facilitation is key

Setting up a successful taskforce

#MMGE15

#mobile360Africa

Section 1: Governance

Covers application, adoption, conflict, governance committee, confidentiality and participation

clauses

Section 2: Financial Considerations

Covers financial considerations for pricing/fees, pre-funding, clearing and settlement

Section 3: Risk and Fraud Management

Covers Risk management, fraud management and Dispute Resolution

Section 4: Transaction Processing

Account to account transaction processing and transaction authorisations

Mobile money interoperability rules checklist

#MMGE15

#mobile360Africa

Tools used

Commercial calculator

and simulator

Technical evaluation

frameworks

Switch benchmarks

URS document

Operational considerations Inter-party rule set

Draft MOUs

#MMGE15

#mobile360Africa

Imdad Aslam - Interim CEO & Director DFS, Karandaaz

Alban Luherne – Director, Orange Money

Moderator: Claire Scharwatt – Senior Market Engagement Manager,

Mobile Money, GSMA

Digitising Government Payments

#MMGE15

#mobile360Africa

Digitizing school registration fees with mobile money

3% 12%

72%

94%

2011-2012 2012-2013 2013-2014 2014-2015

Number of digitalpayments (in millions)

% of payments made viamobile money

• Digital payment

becomes mandatory

• Moov joins

• Government

commitment

• Pilot with MTN and

CelPaid

• Orange joins • Integration

through API

0.7m

0.9m

1.3m

1.5m

#MMGE15

#mobile360Africa

Developing a harmonized customer experience• Agreement on unified customer journey on USSD

• Implement seamless technical integration via API

Co-funding a national marketing campaign• Jointly co-planned, co-funded and co-managed by payment

providers and Ministry of Education

Harmonising the settlement of funds

1.5 million

secondary

school

students

June -

October

4 digital

payment

acceptors

October &

December

41 regional

Government

departments

October &

December

1500+

secondary

schools

1

2

3

Areas of collaboration

#MMGE15

#mobile360Africa

MNOs Government Schools Students

Increase customer

adoption

Enhance value

proposition

Sustainable,

seasonal use case

New revenue stream

Remove cash

handling costs,

security concerns &

administrative burden

Improve payment

efficiency

Reduce leakage of

funds

Increase

transparency

Earlier payments

better budget

management

Increase in overall

fee collection

larger budget

Reduce time, cost &

security concerns

Increase

transparency in terms

of pricing

Better user

experience

Easier to get proof of

payment receipts

Key benefits

#MMGE15

#mobile360Africa

Alban LuherneOrange Money Director, Orange Group

Imdad AslamInterim CEO & Director of Digital Financial Services,

Karandaaz

Claire ScharwattSenior Market Engagement Manager, Mobile Money, GSMA

Panel discussion

#MMGE15

#mobile360Africa

Sheila M’Mbijjewe – Deputy Governor of the Central Bank of Kenya

James Ivan Ssettimba – Head of Financial Inclusion, Bank of Uganda

Moderator: Mia Thom – Engagement Manager, CENFRI

The Economic Impact of Mobile Money in the

Digital Economy

Economic Impact of Mobile Money in a Digital Economy – Kenya’s Experience

Presentation by

Sheila M’MbijjeweDeputy Governor, Central Bank of Kenya

At the

GSMA Mobile 360 Africa, Cape Town, South Africa

October 7, 2015

Outline

1. Kenya’s Mobile Phone Landscape

2. Role of the Central Bank

3. Economic Impact of Mobile Financial

Services

4. Summary

2

1. Kenya’s Mobile Phone Landscape

Kenya has one of the fastest mobile phone serviceadoption rates in Africa:√ As at June 2015, there were 36.1 million mobile phone

subscribers (a mobile penetration of 83.9%).√ There were 27.7 million mobile money service subscribers,

and 129,357 mobile money agents.

Like most developing countries, there are supply anddemand side barriers to accessing formal financialservices – about 70% of Kenya’s population lives inthe rural areas.

The mobile phone platform has provided access tofinancial services by the critical mass.

3

1. Kenya’s Mobile Phone Landscape:Mobile financial services are the most preferred in Kenya due to

lower transaction costs, accessibility and convenience.

4

Source: Fin Access Surveys, FSD

4

2. Role of the Central Bank

Mobile money services have transitioned from cash transfer systemto integration of interfaces and linkages with financial institutionspayment systems.

The Bank plays two main roles in mobile financial services – PolicyDevelopment and Regulatory Oversight.

The Bank also plays an active role towards the seven key pillars ofmobile financial services development in the World EconomicForum’s Mobile Financial Services Development Report, 2011 –regulatory proportionality; adoption and availability; consumerprotection; end user empowerment and access; distribution andagent network; market competitiveness and market catalysts.

The Bank is also promoting innovative delivery channels beyond thebrick and mortar infrastructure – creating appropriate supportinfrastructures such as deposit protection, consumer protection andfinancial education.

5

3. Economic Impact of Mobile Financial Services

A sound, safe, efficient and stable inclusive financial

system is critical for inclusive growth and achievement of

Kenya’s Vision 2030 development goals.

The impact of mobile financial services on economic

development in Kenya has been felt in three broad

areas:

√ financial inclusion,

√ financial sector development, and

√ Economic growth and monetary policy.

6

3.1. Economic Impact of Mobile Financial Services:Financial Inclusion in Kenya has improved significantly since 2006

The proportion of adult

population using formal

financial services in Kenya

increased from 27% in 2006

to 67% in 2013.

Rural areas registered the

highest growth – 142% (from

25% in 2006 to 60% in 2013)

compared to urban areas with

an increase of 124% (from

36% in 2006 to 80% in 2013).

Kenya has the highest ranking

or share of adults with a

mobile money account in East

Africa (at 58 percent, followed

by Somalia, Tanzania, and

Uganda with about 35

percent).

7

Source: Fin Access Surveys, FSD

8

3.2. Economic Impact of Mobile Financial Services:

Financial Sector Development

As at June 2015, there were over 90 million mobile money

transactions, valued at about USD2.16 billion (KSh227.9

billion).

Total mobile money transactions averaged USD72.1 million

(KSh7.6 billion) per day.

The average size of the mobile money transactions per

customer has increased from USD29.1 (KSh3,067) in

March 2007 to USD81.6 (KSh8,601) in June 2015.

MFS are being used to pay for various services including

driving license renewal, payment of bus fares, parking

charges, and utility bills.

9


Financial Sector Development…

Mobile payments account for over 80% of the volume

of payment transactions (7.4% of the total value of

transactions).

Rapid increase in mobile payments attributed to

linkages and partnerships between financial

institutions and Telcos in providing mobile financial

services.

Mobile financial services have created numerous job

opportunities especially for the youth population in

our country – there are 129,357 approved mobile

money agents.

10


Impact on Economic Growth

Mobile phones have enhanced access and usage of financial

services, including access to credit.

A recent IMF study (IMF Working Paper WP/15/22) shows that

improvements in access to credit, depth of credit and credit

intermediation efficiency increase growth.

The study shows that a 1% growth in access to credit and credit

intermediation efficiency can increase Kenya’s GDP by 0.63%

and 1.17%, respectively.

Similarly, the study shows that a 1% increase in the depth of

credit can increase Kenya’s GDP by 0.47%.

11

The amount of

currency outside the

banking sector

(COB) as a ratio of

Broad Money (M3)

and Reserve Money

(RM) has reduced

significantly – an

indicator that less

and less money is

being held outside

the formal financial

system.

Source: Central Bank of Kenya


Impact on Monetary Policy

12

• The Money Multiplier – the ratio of Broad

Money (M3) to Reserve Money (RM) – has

been increasing an indication of the

growing innovation in the financial sector.

• The velocity of money (ratio of nominal

GDP to money supply, M3) – has been

declining, an indication of the increasing

financial depth.

Source: Central Bank of Kenya


Impact on Monetary Policy…

4. Summary

Mobile money is still a nascent industry that can be leveragedupon by financial market players to enhance efficiency in theprovision of financial products and services.

Mobile financial services are evolving – we have moved from thetest and learn approaches that were employed in the initialstages, to the models we have now.

The growth in mobile financial services has a positive impact oneconomic growth, but pose challenges on the monetary policyframework.

Challenges continue to exist, as well as the risks posed, as thedigital platforms continue to evolve.

Countries should continue to share experiences and strengthenpartnerships based on best practices to address these challenges– this will accelerate financial inclusion in developing countries.

13

Ivan James Ssettimba

Bank of Uganda

1

October 7, 2015

Introduction

• The digital economy is the result of the transformationaleffects of new General-Purpose Technologies (GPT) in thefields of information and communication.

• The digital economy has impacted all the sectors of theeconomy and social activities, for instance:– retail, transport, financial services, manufacturing, education,

healthcare, media and so on.

• The expansion of the digital sector has been a key driver ofeconomic growth

2

Mobile Money Services in Uganda

• Mobile money services were first introduced in March 2009;currently there are six mobile money schemes in Uganda.

• The BOU has only approved mobile money operations whenthis is done in partnership with a Supervised FinancialInstitution (SFI).

• Mobile Money Service Providers (MMSP) are required to hold,in an escrow account in their partner SFI, the equivalent of allthe mobile money that has been issued to their customers andagents.

• MMSPs, which are not regulated financial institutions cannotintermediate nor use the funds that have been mobilisedthrough the sale of mobile money.

3

• The number of registered mobile money customers exceedshalf the population of Uganda.

• Uganda’s population with access to formal financial servicesincreased from 28% in 2009 to 54% in 2013* - a significant partof this increase is attributed to increased access to mobilemoney services.

* FINSCOPE survey 2013

4

2009 2010 2011 2012 2013 2014

Registered customers (millions) 0.6 1.7 2.9 8.9 14.0 18.5

Number of transactions ( millions ) 3 29 88 242 400 496

Value of transactions (billions SHS) 133 963 3,752 11,663 18,982 24,050

Number of registered customers and Volume and Value of Mobile Money Transactions in Uganda (2009-2014)


5

Product/Service Status

Transfers/Remittances (Ability to send money to the bottom of the pyramid customers) Live

Merchant Payments – enabling SMEs and Corporates to receive payments P2B Live

Statutory payments (Taxes) P2G Live

Bulk Payments: Salaries, wages B2P e.g. Sugar, Tea and Construction firms Live

Micro Loans and Savings Pilot

Group wallets for SACCOs and VSLA Pilot

Cross border Pilot

Mobile banking; transfers from bank account to M-wallet Live


Consumption Certainty

• The ability to execute instantaneous P2P transfers, compared tothe alternatives of transporting money in person or using a busdriver increases one’s purchasing power, implying that they havethe capacity to consume immediately has a multiplier effect andpositively impacts on output.

Increased employment opportunities

• Agents carrying out cash-in cash-out

• Customer service representatives

• Bank staff

• MMSP staff

Economic Impact of Mobile Money

Growth in Tax Revenue

• Using mobile money instead of cash or cheque for P2G and B2Gmakes it simple, easy and quick for a taxpayer to settle theirobligations.

• The ease, convenience, ubiquity of the service and speed of themobile transactions increases tax revenue.

• Such a service launched in Uganda was projected to at leastcollect an additional USD 25 million in taxes every month.


Improving efficiency

• The adoption of mobile money services has decreasedadministrative costs for companies.

• Mobile money has increased transaction speeds and reducedoutstanding credit times, minimizing how long it takes to collect andinquire after payments.

• The power company UMEME, reported a 99.1% revenue collectionrate in 2014 compared to 94% in 2012, the increased revenuecollection rate was partly attributable to increase in mobile moneypayments


Support families to keep children in school, especially the mostvulnerable

• School fees can be securely and conveniently paid using mobile money.Funds can be stored in the mobile wallet, and small, frequent transactionsmade out, reducing the cash flow burden on the family.

Improve access to healthcare

• With mobile money, the poor have a simple and safe way to save moneyfor future health care costs.

– Specific products can be designed for this purpose, for instance, a service thatenables pregnant women to make small mobile payments to a health serviceprovider, to meet expected costs related to childbirth.

Social Impact of Mobile Money

10

Provision of social benefits

• The Senior Citizens Grants deliver UGX 25,000 (approximately US$8)(2013 value) monthly to senior citizens (people of age 60 years andabove).

• The Vulnerable Family Grants on the other hand pay out UGX25, 000monthly to vulnerable households with low labour capacity and highdependency. As at February 2014, the Programme reached 113,000beneficiaries, with over UGX 32 billion disbursed.

• All these grants are being made through use of mobile money.

Social Impact of Mobile Money

• The delivery of affordable financial services to a population using mobile money isassociated with the attainment of a nation’s crucial economic and social goals.

• Providing financial services draws credit into the banking system, leadingeventually to GDP growth. It increases the creation of capital, leading to anincrease of free enterprise. It develops the depth of a nation’s private sector,which in turn builds new jobs

• These financial developments reduce a nation’s overall income inequality,increase income growth among the lowest paid quintile of the population, andaccelerates poverty alleviation.

• However some challenges still exist– fraud

– network/connectivity problems,

– limited interoperability and

– services for people with special needs

Conclusion

#MMGE15

#mobile360Africa

Fariq Cader – Senior General Manager, Dialog Telecom Ltd.

Brad Magrath – Co-Founder & CCO, Zoona

Omar Moeen Malik – Head of Strategy & Payments, Telenor Pakistan

Gregory Reeve - GM Mobile Financial Services, Millicom

Moderator: Anup Singh – Senior Manager, Microsave

To OTC or not to OTC? The Values and

Sustainability of a Cash to Cash Model

#MMGE15

#mobile360Africa

Spotlight on Rural Supply: Critical Factors to

Create Successful Mobile Money Agents

Lara Gilman – Market Engagement Director, Mobile Money, GSMA

#MMGE15

#mobile360Africa

Mobile money has a limit for how far it can reach.

Mobile money in the vast majority of markets has not yet

reached its limit.

Mobile money could and should be extending further.

Why?

Audience poll! (do you agree or disagree?)

#MMGE15

#mobile360Africa

Social Impact opportunity

• Estimated 70% of the poor

live in rural areas.

Commercial opportunity

• Predominantly rural

markets capture

significantly less than

advanced markets overall.

• Urban saturation risks

longer-term growth.

The potential of mobile money in rural areas

#MMGE15

#mobile360Africa

Assumption 1

The feasibility of serving

customers sustainably is a

core barrier to reaching rural.

Assumption 2

There are successful agents

operating in rural areas.

1. What enables a

rural agent to be

successful?

2. Can providers use

this to adapt

operational

strategies and

extend reach?

1. Transactional data

analytics

2. Quantitative phone-

based interviews with

~ 2000 agents

3. Field-based

interviews with ~ 500

agents & 40 master

agents

Research questions Approach

Scope & methodology of research

#MMGE15

#mobile360Africa

Defining Rural

• Agents have been segmented based on their

monthly value of activity

• 4 segments have been created: a dormant group

with no transaction in the analysed month and 3

tiers (low, medium and high- top 20%)

• Successful agents are part of the ‘high’ segment

• Active agents is a merger of the ‘low’ & ‘medium’

*Although categorizations were cross-referenced with

other months to ensure no abnormal seasonality

Defining Success

Baseline definitions: Rural & Success

#MMGE15

#mobile360Africa

Mali

Chad

Date of launch% of rural

population

% of agents

in rural areas

% success

rural agents

78%

15% 23%

10%34%

61%

Country focus: Mali & Chad

#MMGE15

#mobile360Africa

#4 Rural: An opportunity for

collaboration?

#3 Liquidity: Bridging the access gap

#2 Re-think rural agent profile &

selection

#1 Local context matters: Strategic

growth

Overview of key findings

#MMGE15

#mobile360Africa

38%

56%

10%

23%

0% 20% 40% 60% 80% 100%

Chad

Mali

Rural average (national) Unique market context

% of successful rural agents in unique market context vs, average

#1 Local context matters: Strategic growth

#MMGE15

#mobile360Africa

26

30

36

8

15

0

5

10

15

20

25

30

35

40

Overall Rural Active Rural Successful

Urban Active Urban Successful

Seniority of business (in months), Mali

#2 Re-think rural agent profile & selection

Rural agents look different

• Broader product portfolio

• Customer loyalty and trust

play an even more important

role

• Older established businesses

#MMGE15

#mobile360Africa

39%

64% 64%

43%

34%

0%

10%

20%

30%

40%

50%

60%

70%

Overall Rural Active Rural Successful

Urban Active Urban Successful

Orange Money agents that offer sim and airtime scratch cards


#MMGE15

#mobile360Africa




play an even more important

role


#MMGE15

#mobile360Africa

80% of rural customers stay with the same agent in Chad

(Transactional analytics)

42% of successful rural Tigo Cash

agents reported knowing the majority or all of their

customers before starting their business





play an even more

important role


#MMGE15

#mobile360Africa

Liquidity is a challenge and

banks are an enabler...

...however, there are successful agents

lacking banking infrastructure…...and master agents play the key role.

Overall, 57%

Rural Successful, 56%

Urban Active, 52%

Urban Successful, 65%

Rural Active, 15%

% of agents in Mali with access to

financial services

In Mali, 44% of successful

rural agents lack access to

financial services.

In Chad, 84% of

successful rural agents lack

access to financial services.

Successful rural agents in

Chad were

4xmore likely to have their

masteragent visit them to

rebalance.

#3 Liquidity: Bridging the access gap

#MMGE15

#mobile360Africa

70% 52%

Tigo Cash agents offering Airtel Money (% of total)

Rural successful Rural unsuccessful

#4 Rural: An opportunity for collaboration?

#MMGE15

#mobile360Africa

Workshop: Creating a Go-to-Market Tool

Full report released today

Upcoming blog series

Iterating toward best practice…

Next steps

Documents

Mobile Money Global Event - GSMA Money Global Event Wednesday October 7, 2015 ... Ecosystem foundations 4 Advocate for ... • Digital payment becomes mandatory